Utah Licensed Beverage Assoc. v. Leavitt et al., No. 00-4058

• Citation: 256 F.3d 1061
• Decision Date: 24 July 2001
• Docket Number: No. 00-4058
• Parties: (10th Cir. 2001) UTAH LICENSED BEVERAGE ASSOCIATION, a Utah non-profit corporation; WAYNE BENSON; and NEW MOON PRESS, INC., a Utah corporation d.b.a. CATALYST, Plaintiffs-Appellants, v. MICHAEL LEAVITT, Governor, State of Utah; JANET GRAHAM, Attorney General, State of Utah; JERRY D. FENN, Chair, Utah Alcoholic Beverage Control Commission; NICHOLAS E. HALES, VICKIE McCALL, TED LEWIS, and CARL HAWKINS, Members, Utah Alcoholic Beverage Control Commission, Defendants-Appellees
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1061

256 F.3d 1061 (10th Cir. 2001)

UTAH LICENSED BEVERAGE ASSOCIATION, a Utah non-profit corporation; WAYNE BENSON; and NEW MOON PRESS, INC., a Utah corporation d.b.a. CATALYST, Plaintiffs-Appellants, v. MICHAEL LEAVITT, Governor, State of Utah; JANET GRAHAM, Attorney General, State of Utah; JERRY D. FENN, Chair, Utah Alcoholic Beverage Control Commission; NICHOLAS E. HALES, VICKIE McCALL, TED LEWIS, and CARL HAWKINS, Members, Utah Alcoholic Beverage Control Commission, Defendants-Appellees.

No. 00-4058

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

July 24, 2001

Appeal From The United States District Court for the District of Utah (D.C. No. 2:96-CV-581-S) [Copyrighted Material Omitted] Brian M. Barnard, (James L. Harris, Jr., with him on the briefs), Utah Legal Clinic, Salt Lake City, Utah, for Plaintiffs-Appellants.

Thom D. Roberts, Assistant Attorney General, State of Utah (Jan Graham, Attorney General, State of Utah, with him on the brief), Salt Lake City, Utah, for Defendants-Appellees.

Before HENRY and MURPHY, Circuit Judges, and MILLS, District Judge.¹

HENRY, Circuit Judge.

Plaintiffs brought this 42 U.S.C. 1983 action against the defendant state officials, seeking declaratory and injunctive relief for alleged violations of the First Amendment. The district court denied the plaintiffs' request for a preliminary injunction, as well as their motion for summary judgment. Plaintiffs now appeal the denial of the preliminary injunction; we have jurisdiction pursuant to 28 U.S.C. 1292(a)(1). Because Supreme Court precedent protects the commercial speech at issue here, we reverse the judgment of the district court.

BACKGROUND

The State of Utah exercises strict control over the importation, distribution, marketing, and sale of alcoholic beverages within its borders. In this case, we are asked to decide whether one aspect of that controlUtah's restrictions on commercial advertisements for liquorimpermissibly infringes upon the First Amendment rights of that state's citizens.

Both parties in this case recognize that the Twenty-first Amendment gives Utah broad powers to regulate alcoholic beverages. See U.S. Const., amend. XXI, 2; Ziffrin, Inc. v. Reeves, 308 U.S. 132, 138 (1939). However, in 1996, appellants (henceforth collectively referred to as "ULBA," for Utah Licensed Beverage Association) sued defendants (henceforth "Utah"). ULBA argued that in light of certain recent First Amendment decisions by the Supreme Court, Utah's laws restricting commercial advertising by vendors of wine and distilled spirits could no longer be considered a proper exercise of the state's Twenty-first Amendment powers. See Aplt's Br. at 2 (citing 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996), and Rubin v. Coors Brewing Co., 514 U.S. 476 (1995)).

Three years later, the district court denied ULBA's motions for summary judgment and for a preliminary injunction. It concluded that ULBA had not demonstrated "that the State's restrictions on advertising of alcoholic beverages are an unconstitutional infringement upon [ULBA's] First Amendment rights," and had failed to establish any of the elements necessary to support a preliminary injunction. Aplt's App. at 251 (Memorandum Decision Addressing Plaintiffs' Motion for Preliminary Injunction, dated Feb. 28, 2000, at 5). ULBA now appeals.

DISCUSSION

I. Standard Of Review

We review a district court's denial of a preliminary injunction for an abuse of discretion.² See A.C.L.U. v. Johnson, 194 F.3d 1149, 1155 (10th Cir. 1999). An abuse of discretion occurs "only when the trial court bases its decision on an erroneous conclusion of law or where there is no rational basis in the evidence for the ruling." Hawkins v. City and County of Denver, 170 F.3d 1281, 1292 (10th Cir. 1999) (internal quotation marks omitted).

II. Elements Necessary To Obtain A Preliminary Injunction

In order to obtain a preliminary injunction, a movant must establish (1) that it has a substantial likelihood of prevailing on the merits; (2) that it will suffer irreparable injury if the injunction is denied; (3) that the threatened injury to the movant outweighs the injury that the opposing party will suffer under the injunction; and (4) that the injunction would not be adverse to the public interest. See Country Kids 'N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1283 (10th Cir. 1996). Because "a preliminary injunction is an extraordinary remedy, the right to relief must be clear and unequivocal." SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991) (citation omitted).

III. ULBA's Likelihood of Success on the Merits

ULBA contends that despite our deferential standard of review, it has demonstrated a substantial likelihood of prevailing on the merits, because the district court made an error of law and "misapplied" the test set forth in Central Hudson Gas & Electric Corp. v. Public Service Comm'n of New York, 447 U.S. 557 (1980). As a consequence, ULBA maintains that it has satisfied the first requirement for preliminary injunctive relief.

Under Central Hudson, laws restricting commercial speech are subject to an "intermediate" level of scrutiny. The Supreme Court stated:

In commercial speech cases, then, a four-part analysis has developed. At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted government interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

Id. at 566. In order to determine whether the district court made an error of law when it concluded that ULBA had not established a likelihood of success on the merits, we must review that court's application of the Central Hudson test.

A. The District Court's Central Hudson Analysis

The district court considered the four part Central Hudson test in detail in its Memorandum Decision Addressing Plaintiffs' Motion For Summary Judgment, which it incorporated by reference into its Memorandum Decision Addressing Plaintiffs' Motion For Preliminary Injunction.

With respect to the first part of the Central Hudson test, whether the regulated speech concerns lawful activity and is not misleading, the district court agreed with ULBA that a number of the challenged statutes regulated lawful, nonmisleading speech. It rejected Utah's argument that the majority of the statutes regulated conduct, not speech, and were thus constitutional. The court stated that, because "[c]onsumption of alcoholic beverages involves lawful conduct," and "[c]ommercial speech about lawful conduct is subject to First Amendment protection," Utah could not "escape review of its legislation by asserting that the challenged conduct is unlawful under the very same legislation being reviewed." Aplt's App. at 268.

In the second part of the test, which requires the court to assess the substantiality of the government's interest, the district court found that the interests cited by Utah in support of its advertising restrictions were in fact substantial. The court identified these interests as the "operation of a public business, with the goal of satisfying public demand for alcoholic beverages while protecting the public interest 'including the rights of citizens who do not wish to be involved with alcoholic products,'" as well as "the promotion of the public welfare," including concerns such as "temperance, health, safety, consumer protection [and] protecting minors." Id. at 270 (citing Utah Code Ann. 32A-1-104(3) (1999)). The court rejected ULBA's argument that protecting non-drinkers from alcohol advertising could not be a substantial interest, stating that where "operating a public business . . . involves alcoholic beverages it seems clear that a substantial interest is involved, even when a stated goal is to protect non-drinkers." Id. at 271.

The district court then turned to the third part of the test, inquiring whether the Utah laws directly advanced the interests identified by the state. The court noted statistics put forth by ULBA which supposedly demonstrated that the repeal of advertising restrictions would not lead to an increase in overall demand for alcohol. It then reviewed the evidence submitted by Utah, in the form of testimony and affidavits by various physicians and public health officials, who opined that "the State's public welfare interest is real and materially advanced by the State's regulation of alcoholic beverage advertising." Id. at 273. The court concluded that "there is sufficient evidence of record to place in dispute the issue of whether the State's asserted interests in restricting advertising of alcoholic beverages are directly and materially advanced by the challenged restrictions on advertising alcoholic beverages." Id. at 273-74.

Finally, the district court reached the fourth part of the Central Hudson test, "whether the speech restriction is no more extensive than is necessary to serve the government interest." Id. at 274. It cited the Supreme Court's recent discussion in Greater New Orleans Broadcasting Ass'n, Inc., v. United States, 527 U.S. 173 (1999), where the Court stated that in the fourth part of the test, "[t]he Government is not required to employ the least restrictive means conceivable, but it must demonstrate narrow tailoring of the challenged regulation to the asserted interesta fit that is not necessarily perfect, but reasonable." Aplt's App. at 274 (quoting Greater New Orleans, 527 U.S. at 188) (internal quotation marks omitted).

The district court determined that Utah had again "succeeded in placing in dispute" the issue of whether its statutes satisfied the fourth part of Central Hudson. Aplt's App. at 278. It stated that Utah's statute...